To rein in run away pension costs, Governor Schwarzenegger and Senator Hollingsworth (R-Murrieta) today joined forces to reform the state’s unsustainable public employee pension system.
Over the last decade, the cost to taxpayers for public employee retirement benefits has increased by 2000% from $150 million per year to over $3 billion. Legislation authored by Senate Republican Leader Hollingsworth (Senate Bill 919) would reform pensions for new state employees to ensure taxpayers are protected.
“The current pension program is unaffordable, unsustainable and it will lead to California’s fiscal ruin. Taxpayers can no longer afford to provide state workers with pension plans that are far richer than anything comparable in the private sector,” said Hollingsworth.
Currently there are 9,111 retired California government workers receiving pensions in excess of $100,000 and according to one recent study, California's public retirement plans are under-funded by more than a half trillion dollars ($536 billion), equaling about $36,000 per household.
SB 919 is estimated to save $110 billion over 30 years. Some of the major reforms contained in this measure include:
Reforms the retirement formula for new state employees by requiring them to work additional years more in line with the private sector in order to receive full retirement benefits.
Changes the final compensation calculation to take into account the highest 3 years of wages instead of the highest 1 year.
Increases the amount employees must contribute toward their retirement.
“We don’t have the benefit of continuing on the current course. The costs will eventually have to be paid for by each and every one of California’s hard working families, or we will see devastating cuts to public safety, education, health programs and universities,” concluded Hollingsworth.
SB 919 awaiting action by the Senate Rules Committee.